Biomedical Manufacturing Workshop

Ivy Tech Orthopedic Advanced Manufacturing Training Center

Warsaw, IN

October 30, 2009

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Background and Introduction• BioCrossroads completed and published a study in September 2009

assessing the ability of the Warsaw–based orthopedics sector to meet current challenges and maximize future opportunities

• Input from industry executives, college and research university administrators and faculty, orthopedic surgeons, academic and community development officials

• Retained three sets of industry and economic development experts– Dr. Mary Walshok, Global Connect / UCSD– Dr. Walt Plosilla and the Battelle Memorial Institute– Dr. Rick Sasso, Indiana Spine Group

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Indianapolis - 9th largest life sciences employment sector in the U.S.

Metro areas with the largest total employment levels (greater than 10,000) in the BioSciences by MajorSubsector Composition, 2004. Battelle “Growing the Nation’s Bioscience Sector: A Regional Perspective” 2007

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33% of the global orthopedics industry is based in Warsaw

Rest of World $4.9B

Georgia - $4M

Indiana - $9.9BMichigan - $5B

Oregon - $95M

California - $815M

Colorado - $7M

Texas - $763M

Minnesota - $3.4B Illinois - $12M

Florida - $642M

Tennessee - $389M

North Carolina $24M

Virginia - $77M

New York - $414M

Massachusetts - $299M

Maryland $15M

New Jersey $453M

Pennsylvania $2.9B

* Data includes Orthopedic Companies with 2007 Sales > $5MM as reported by Knowledge Enterprises and independent research conducted by BioCrossroads

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Seattle MSA

San Francisco MSA

San Jose MSA

Los Angeles MSA

Salt Lake City MSA

Dallas MSA

Tampa MSA

Miami MSA

Philadelphia MSA

New York MSA

Boston MSAMinneapolis MSA

Chicago MSA

Milwaukee MSA

2006 Employment

>20,000

10,000-19,999

5,000-9,999

4,000-4,999

San Diego MSA

Indianapolis MSA

Riverside MSA

Pittsburgh MSADenver MSA

Seattle MSA

San Francisco MSA

San Jose MSA

Los Angeles MSA

Salt Lake City MSA

Dallas MSA

Tampa MSA

Miami MSA

Philadelphia MSA

New York MSA

Boston MSAMinneapolis MSA

Chicago MSA

Milwaukee MSA

2006 Employment

>20,000

10,000-19,999

5,000-9,999

4,000-4,999

San Diego MSA

Indianapolis MSA

Riverside MSA

Pittsburgh MSADenver MSA

Warsaw’s Orthopedics Industry has the 15th largest regional employment for the entire Medical Device Industry

Source: Battelle.

The Twenty Largest U.S. Regional Medical Device Locations, 2006 employment

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The Warsaw “Micropolitan Area”

“Medical devices and equipment has a rich history in and around Warsaw, Indiana… this sector has a relative concentration of jobs more than 50 times that for the national average, [resulting in] a location quotient that is literally ‘off the charts.’”

--“Kosciusko County’s Health and Biomedical Industry: Economic Analysis,” Battelle Technology Partnership Practice, April 2009.

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What we heard….• “Warsaw’s orthopedic device cluster may be the single

most concentrated industry cluster, anywhere”

• The orthopedics industry is prospering, but there is a local labor shortage for skilled employees

• “The orthopedics industry in Warsaw is not wounded, but it is stunted”

• Talent recruitment and retention is difficult in Warsaw

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What we heard….• “Warsaw offers a high quality of living for low relative

cost”

• “Midwest values and amenities should be embraced and enhanced”

• “There is a great entrepreneurial spirit here”

• “Innovation is not an obstacle to near-term growth”

• “…but Warsaw’s orthopedic companies will be unable to reach the next level without community support”

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ChallengesIndustry-Wide

• Shifting Policy and Regulatory Environment

• Tougher Reimbursement Environment

• Scrutiny of Surgeon Relationships

• Cost Pressures

• Outsourcing

• Changing Innovation Landscape – even though major companies do not feel immediate threat

Warsaw Specific

• Talent Attraction and Retention

• Diversified Economic Base

• Geographic Isolation

• No Sense of Urgency

• Lack of Focused Community Based Strategy

• Access to Capital

BioCrossroads has developed a set of Warsaw-based recommendations

Designed to engage, promote and support the orthopedic assets and link broader business and community assets within the region

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Preliminary Areas for Focus

• Branding and Awareness

• Community Enhancement

• Education

• Talent and Workforce Development

• Transportation and Logistics

• Industry Support Enterprises

• College and Research University Engagement

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501(c)(6) Business League

Existing EntityKosciusko County

Community Foundation (KCCF)

501(c)(3) Public Charity

New EntityOrthopedics Capital

Foundation

New 501(c)(3) Supporting

Organization

OrthoWorx could recommend Board of Directors for Orthopedics Capital Foundation, subject to review and appointment by KCCF

Shared staff, office space, boards and committees…

Leverage existing community foundation and lay the infrastructurefor a potential standalone entity as the initiative matures

Proposed Structure

New Entity

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A Warsaw-Based, Regionally Focused InitiativeDesigned to engage, promote and support the orthopedic assets and link broader

business and community assets within the region

Opening Areas for Focus

• Branding and Awareness

• Community Enhancement

• Education

• Talent and Workforce Development

• Transportation and Logistics

Branding and Awareness

• Warsaw needs to stop being Indiana’s “best kept secret”!

• Branding and promoting Warsaw’s orthopedic strengths can provide strategic definition to the cluster that has developed opportunistically over the past 115 years

• “OrthoWorx” will bring together the strength of local industry with the heart of the community – the people who work to discover, design, develop and manufacture orthopedic products

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Community Enhancement• Cultural and recreational offerings such as

access to daycare, adult education and museums are crucial to the overall vitality of the region and industry’s ability to recruit and retain talent

• Embracing a regional approach to community enhancement, Warsaw’s amenities can be supported by a larger base and benefits of surrounding communities can be leveraged

• Strategic partnerships with natural allies like Fort Wayne, South Bend and Grace College will promote the sharing of resources

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Education

• A comprehensive K-16 educational strategy is crucial to both talent development and community enhancement

• I-STEM Resource Network should be utilized to enhance competencies in science, technology, engineering and mathematics

• Grace College and Ivy Tech offer important local resources to leverage

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Talent and Workforce DevelopmentCritical Parties Include:

• Ivy Tech Curriculum and Orthopedic Advanced Manufacturing Training Center

• Company Human Resources and Manufacturing Divisions

• Indiana Department of Workforce Development

• “Creative” programs for adult education/enrichment, young professional networking, etc

OrthoWorx’s talent and workforce development initiative could collaboratively work to help identify gaps in training programs and set standards for training workers to transition into the orthopedics sector. It could also develop programs to focus on and retain key talent that drives the sector’s success. 17

Transportation and Logistics

• Manufacturing, shipping and distribution are key to the orthopedics industry and represent a significant driver of efficiency and cost

• Work with regional, state and federal resources to design and implement a comprehensive transportation and logistics strategy

• Analyze connectivity to regional transit hubs

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Possible Industry Support EnterprisesAdding depth to Warsaw’s robust supply chain

• Orthopedic Implant Sterilization Facility

• Orthopedic Surgeon Training Facility

• Independent Biomechanical Testing Facility

• Preclinical Testing Facility

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Orthopedics Research Institute

IN-OrthoNet

Indiana Orthopedics Research Network

• Biomedical Engineering Departments at Notre Dame and Purdue propose a translational orthopedics research institute

• Supplements existing, specific collaborations involving Indiana’s research universities and orthopedics companies

• “Big 3” orthopedics companies not the immediate customers

• Dr. Peter Kilpatrick (Notre Dame) and Dr. George Wodicka (Purdue) have developed IN-OrthoNet to organize and leverage Purdue, Notre Dame and IU School of Medicine orthopedic resources by linking researchers, clinicians, and entrepreneurs to compete collaboratively in a focused, independent environment for research grants and industry-specific success in technology transfer and commercialization

Possible Industry Support EnterprisesAdding depth to Warsaw’s robust supply chain

• Orthopedic Implant Sterilization Facility

• Orthopedic Surgeon Training Facility

• Independent Biomechanical Testing Facility

• Preclinical Testing Facility

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IN-OrthoNetIndiana Orthopedics Research Network

During our presentation, it was recommended that one, or several, industry support enterprises could be incorporated into IN-OrthoNet

BioCrossroads has developed a set of Warsaw-based recommendations

Designed to engage, promote and support the orthopedic assets and link broader business and community assets within the region

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Preliminary Areas for Focus

• Branding and Awareness

• Community Enhancement

• Education

• Talent and Workforce Development

• Transportation and Logistics

• Industry Support Enterprises

• College and Research University Engagement